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Australian energy stocks to watch


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As the ASX 200 fell by -1.2% last week following a wild ride on Wall Street and after the RBA hiked rates by another 25bp to 3.1%, Tony Sycamore looks at three Australian energy stocks to watch.

1670899553932.jpgSource: Bloomberg
 

 Tony Sycamore | Market Analyst, Australia | Publication date: Tuesday 13 December 2022

ASX 200 overview

Last week the ASX 200 fell by -1.2% following a wild ride on Wall Street and after the RBA hiked rates by another 25bp to 3.1%. Before markets can take a well-deserved break for the holiday period, a huge week lies ahead, including U.S inflation data, key central bank interest rate meetings, Australian labour force, and consumer confidence data.

Typically, when the ASX 200 falls, the defensive Utility sector outperforms. However, Utility shares have been unceremoniously dumped in the early part of this week following the Albanese government's emergency legislation aimed at capping coal and gas prices to lower energy bills.

We look at three utility/energy stocks in the article below.

  • Origin Energy

Origin Energy fell by 7.82%, closing at $7.19 on Monday on concerns around the government's proposed intervention in gas and coal markets. The legislation, if passed, will mean producers will not be able to charge more than $12 a gigajoule for the gas they sell.

Last month Origin agreed to a $9 a-share takeover offer from Brookfield and Mid Ocean which valued the business at $18.4bn. However, the deal was not formally binding. Price caps will likely impact Origin's energy supply business, and the $9 per share bid now looks rich. There is a risk that the Brookfield consortium will walkway from the deal.

Despite Monday's sell-off, the share price of Origin is still up 37% in 2022. Technically there is short-term support at $7.13, coming from the May 2022 high. Below that, the $6.48 high from May 2022 will offer medium-term support.

Origin Energy daily chart

1670898560126.pngSource: TradingView
  • AGL Energy

AGL Energy is another company in the firing line of the government's proposed legislation to cap coal and gas prices.

After tumbling almost 7% on Monday, the share price of AGL closed 2.62% lower at $7.79. Nonetheless, the share price remains up over 27% in 2022 and was well supported on the dip below $7.50 - a level that may see buyers emerge again.

AGL daily chart

1670898578959.pngSource: TradingView
  • Coronado Global

As a result of the proposed government legislation, miners won't be able to sell thermal coal for more than US$125 per tonne, well below the going rate of US$400 per tonne.

The share price of Coronado Global fell 5.42% on Monday, closing at $1.92. The share price of Coronado has rallied over 50% this year, supported by the energy crisis in Europe and the war in Ukraine. Short-term support is viewed not far below at $1.85, and medium-term support is between $1.60 and $1.40.

Coronado Global daily chart

1670898591476.pngSource: TradingView

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